demand response programmes

It’s early evening, on a weekday in February. The temperature in Melbourne, Australia, has been high for a few days, with it peaking at 40 degrees. The local utility calls a demand response event. An elderly lady responds, choosing not to run the air-conditioning unit in her rented home, trying all she can to keep her energy bill down. She is unaware of the health risks she is placing herself under.

Just two doors down a family have three air-conditioning units running at the lowest temperature, with the fan on high. The parents sit in the lounge watching TV, and the kids are spending time in their rooms.

They also receive the demand response notification, but they do not feel the few dollars in incentives on offer to reduce their consumption is worthwhile, so choose to do nothing. The family are oblivious to the suffering of the elderly women just a few doors away.

If this family knew that their energy consumption choices impacted that elderly lady’s ability to stay cool, do you think they may have taken part in the demand response event? Would you?

This scenario plays out all over the world, not because people are selfish, but because they do not understand how the electricity system works and how their actions impact the cost and availability of electricity to others.

The supply of electricity is complex. People have a general understanding that if they buy an energy efficient appliance or conserve energy, their bill will be less. Very few people have an appreciation that a large percentage of the investments made by our industry, and therefore the rates consumers have to pay, is based on infrastructure that is only used a few hours a year to deliver power during times of extreme demand, such as hot days.

I believe if people understood this, we would see a significant shift in behaviour and uptake in demand response. No longer would we be asking people to change behaviour to reduce a few dollars from their bill. Instead, we would be asking people to change behaviour to help out those less fortunate than themselves.

For this to work the narrative must be clear, compelling, and consistent – explaining what demand response is, and why it is important.

This message must come from sources people trust so it is seen as authentic. The stories that are told need to resonate, and create buy-in. The message should not be complex, and analogies always work well. For example, I was told a great analogy just the other day.

Imagine you are a family of five, and you are building a new house. Would you build five bathrooms? After all, you all need the bathroom first thing in the morning, and just before you go to bed at night. So, does it make financial sense to build five? Of course not – you would have one, maybe two. As a family, you work together to adjust when you use the bathroom.

This analogy explains the challenge our industry faces. If everyone uses electricity at the same time, costs will be much higher than they need to be, compared to if we all worked as a community and balanced out when the energy was consumed. The general public has never had this explained to them, at least not in a consistent way and at scale, by sources they trust.

I firmly believe that at our core, the vast majority of us want to be part of a community or tribe, as it’s more commonly referred to these days. Within that tribe, we want to do our bit to help others. Imagine if demand response events did not pay incentives to individual households; instead they put that money into a central fund to help vulnerable energy consumers.

We need to design demand response with a focus on the community and not the individual. We don’t want the elderly lady, two doors down, to take part in a demand response event. We want her to use her air conditioning free from worry.

Advancements in energy technologies, such as rooftop solar and local battery storage, along with the connected home, will make demand response much less intrusive on households. However, we are quite a few years away from this being at a scale that helps all communities. Even when it is, people need to understand what demand response is, and why it is important, so they are willing to have their homes remotely controlled by their energy company, or third-party energy aggregator.

As utilities continue their digital journey, demand response needs to be front and centre of the customer engagement programme. What is the narrative you are using to ensure demand response delivers the best outcome for the community and not just for individuals? MI

About the author

Wayne Pales is the author of the bestseller, The Digital Utility, a lecturer at the Asian Institute of Technology and CEO of The Chapel Group. Wayne works with energy companies to develop and deliver digital roadmaps that result in benefits to the consumer, the community and its shareholders.

His subject matter expertise comes from almost twenty years in the utility industry across Australia and Asia-Pacific. In that time, Wayne was recognized as one of the top ten people in smart energy.

Wayne has led over twenty smart energy initiatives, including Southeast Asia’s first end-to-end smart metering and demand response program, which won a series of awards across the region.